Commerzbank’s Tatha Ghose reiterates a constructive scenario for the Russian Ruble tied to a potential peace breakthrough and subsequent easing of key US and EU sanctions. He argues that the automatic one‑year extension of existing US sanctions is largely procedural, while Trump’s desire for a peace ‘victory’ keeps a sanctions rollback scenario in play for RUB pricing.

Peace breakthrough would unlock RUB upside

"In our Strategic Currency Briefing on the ruble from early-February, we highlighted a possible positive scenario for the currency centred around a breakthrough of peace negotiations. In this event, we foresee that some of the key US and EU sanctions on Russia would be lifted – for example, the freeze on the central bank’s dollar and euro assets – as part of the settlement."

"That said, the extension is widely seen as a formal process, rather than specific political signal – for now, there is no concrete basis not to carry on with steps which would have been taken were negotiations to fail. But notably, the US President is refraining from introducing new sanctions, and is repeatedly expressing interest to see Russia participate in a peace council format."

"Last but not least, the US continues to mediate via trilateral talks on the Russia-Ukraine conflict – it has not abandoned efforts. These factors collectively imply a significant window of opportunity for Russia."

"We continue to believe that any potential peace breakthrough would involve removal or exemptions of key sanctions because it is difficult to see the Russian side agreeing otherwise. In other words, the automatic extension of older sanctions does not mean that the US government will not go back and reverse them when necessary."

"President Trump's evident desire to register a victory means that the positive scenario for the ruble ought to be priced-in, with some probability at least, by markets."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)